[StBernard] Official: Hospital still profitable after tax rejection

Westley Annis westley at da-parish.com
Tue Apr 8 09:50:04 EDT 2014

Official: Hospital still profitable after tax rejection

April 08, 2014

Two days after St. Bernard Parish voters overwhelmingly rejected a one-year
property tax proposal to expand medical services at the parish's publicly
owned hospital in Chalmette, the facility's interim boss said the 40-bed
hospital is not in financial jeopardy but will need to scale back ambitious
plans to offer more specialty medical care.

"We have a successful operation; it's just going to marginally make money,"
Wayne Landry, the hospital's interim chief executive, said Monday. "It'll be
tough for us to recruit physicians, obviously, without any money to recruit
them, but the hospital will continue just like it has for the last year
since it opened."

The 30-mill tax proposal, which voters rejected by a four-to-one margin,
would have generated an estimated $9 million. That money, hospital officials
said, was to be a one-time cash infusion to hire at least eight health care
specialists and implement an electronic medical records system.

Revenue from the tax also would have been used to replace the hospital's
billing software, which has been so hampered by problems that administrators
hired an outside company to bill patients. Those upgrades could cost about
$4.5 million.

All of those plans will need to be put on hold, Landry said.

Parish President David Peralta, who some expect will be forced to square off
against Landry when he runs for re-election next year, said Monday that he
considered the strong opposition at the polls to be "a no-confidence vote in
the people running the hospital."

"To have almost 80 percent, I think that's serious, and I think that shows
that there is a total lack of confidence in the group that's running the
hospital right now. We need a professional hospital management team in
there," he said.

Parish Council Chairman Guy McInnis said he didn't view the election results
from the same perspective.

"They don't want to put up any more taxes for the hospital," he said of
parish voters. "I think it's as simple as that, and I think the public
doesn't want politics in the administering of their hospital."

Landry, who served on the council from 2008 to 2011, was tapped to become
head of the hospital after the nonprofit Franciscan Missionaries of Our Lady
Health System withdrew from managing it in late 2012, citing philosophical
differences. Landry also serves on the St. Bernard Parish Hospital Service
District Board, which oversees the facility.

The parish built the $70 million hospital using a combination of federal
disaster money, tax credits and state capital outlay dollars.

The state legislative auditor last year warned that the hospital's financial
stability was in question if the billing software went uncorrected for too

The audit showed the hospital incurred more than $7.6 million in losses
during the 2012-13 fiscal year, taking in $6.2 million while spending nearly
$13.9 million. That came as the hospital ramped up services, hiring almost
150 full-time employees as it began treating patients.

But Landry said that after that initial year, the hospital found its
financial footing and it is expected to turn a profit of up to $200,000 in
the current fiscal year, which ends in June. The hospital, which opened its
doors in late 2012, is a "lean and efficient operation," he said.

"No health care expert in the country would look at this and say that this
place is mismanaged," he said. "Do you realize the Herculean effort it took
to make this place, in its first full year, basically profitable?"

Saturday's vote came a little more than three years after parish voters
approved a 10-year, 8-mill property tax to cover start-up costs of the
hospital. That millage, Landry said, will end up paying out for only nine
years instead of 10 due to a scheduling conflict of when it went into

Landry attributed the latest proposal's defeat to some voters' confusion
about how long the tax increase would have lasted. "There was so much
misinformation out there, it was very confusing to the electorate," he said.

Also working against him, Landry said, was the belief by many residents that
they're being taxed to the hilt. Landry contends that the specialists would
not only have brought in revenue to the hospital, but also generated
millions in economic benefits annually to the community.

"The truth is that people just don't want to pay any more taxes, and I
understand that," he said. "They feel like, recently, they've been taxed to
death. Look, that's a big hit for these people down here in St. Bernard."

Still, some health care experts observed that hiring a slew of specialists
at a small hospital was an idea that bucked industry trends.

Walter Lane, an associate professor of economics at the University of New
Orleans who has studied the health care industry, said smaller hospitals
like the St. Bernard Parish Hospital are under pressure "to become more
efficient, and having lots of specialist services is high-cost."

Instead, he said, community hospitals are joining larger systems. "Becoming
part of a system, for a variety of different reasons, is the trend that is
clearly going on nationally," Lane said.

But Landry waved off the idea of the hospital joining a larger health care
institution, which was briefly discussed as an option when parish officials
set out to build a new facility more than seven years ago. "The only
hospitals that link up, so to speak, or get taken over by other hospitals
are those that are failures," he said. "This hospital's successful, so
there's no need for us to put that in someone else's hands."

Even after the vote, Landry said he does not expect to have to lay off any
hospital staff in the near future.

"I really don't see it," he said. "I don't have a crystal ball, but I don't
foresee any layoffs or changes."

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